NBCUniversal Media LLC just scored its best upfront selling season since it has been part of Comcast Corp. amid what top executives said is good advertising market overall.
"Overall volume was up significantly, and rate was up very significantly. This is maybe the fifth upfront that we've really led the upfront," NBCU President and CEO Steve Burke said on a July 26 second-quarter earnings call with analysts.
Comcast President, Chairman and CEO Brian Roberts emphasized NBCU's diversified portfolio as driving advertising and other revenue streaming, highlighting Telemundo (US)'s coverage of the 2018 FIFA World Cup and continued gains by news network MSNBC (US) over CNN (US) as benefiting the second quarter. He also noted NBC (US)'s strength during the 2017-18 TV season. Demand for NBCU's content drove "high single-digit pricing gains, coupled with 5% growth in volume commitments," for the just-ended upfront selling season, Roberts said. Digital sales saw growth of 25%.
Burke said NBC's prime-time pricing grew at an 11% clip.
The ad market has been very strong overall, Burke said, pointing to strength in in-season or scatter advertising sales and World Cup-related sales in particular. He said the company is making investments in improving its ad products and services, including with more targeted, or addressable, advertising. "That's obviously going to be important as we differentiate ourselves against digital advertisers," he said.
Gains at the cable networks and theme park units overcame a significant decline in the media company's filmed entertainment business, enabling NBCU to ring up a 4.2% increase in second-quarter adjusted EBITDA to $2.16 billion from $2.07 billion in the prior-year period, despite a topline performance that was flat at $8.31 billion.
As to the World Cup, Telemundo's linear coverage helped boosted broadcast ad revenue 9.2%. Comcast Senior Executive Vice President and CFO Michael Cavanagh on the call said that sans soccer, advertising "would have been consistent with our recent underlying trends, which have been roughly flat year-over-year." He said retransmission-consent fee revenue increased about 20% to $437 million.
All told, broadcast revenue grew 6.7% to $2.39 billion from $2.24 billion. Segment adjusted EBITDA edged up to $417 million from $416 million, owing largely to programming and production costs linked to the World Cup. Backing out the tournament, Cavanagh said adjusted EBITDA would have grown in the high single digits.
Cable networks revenue rose 8.2% to about $2.92 billion from $2.70 billion in the second quarter of 2017. Contributions came in the form of an 8.7% increase in distribution revenue tied to contractual rate hikes and the timing of contract renewals, countered by a moderating decline in subscribers. Cavanagh said NBCU's cable networks' sub base slipped just under 1%, as the "adoption of virtual MVPDs drove an improvement from the recent trend of 1.5% to 2% declines."
Content licensing and other revenue increased 22.5%, due to the timing of content provided under licensing agreements. Advertising revenue increased 3.6%, reflective of higher rates, partially offset by audience ratings declines.
Adjusted EBITDA for the cable networks improved 12.5% to $1.19 billion, shaped by higher revenue, partially offset by increased operating costs, from $1.06 billion.
At the theme parks, revenue rose 3.6% to $1.36 billion from $1.31 billion, boosted by higher per capita spending led by the openings of several new attractions, notably the Fast & Furious — Supercharged in Orlando, Fla. That trend was countered to some extent by the timing of spring holidays, compared to the 2017 season. Adjusted EBITDA advanced 3.4% to $569 million from $551 million, behind the enhanced revenue, partially offset by higher operating expenses, including costs to support new attractions.
The positives at those three segments were largely blunted by results at the filmed entertainment unit, where revenue declined 20.2% to $1.71 billion, behind lower theatrical, home entertainment, and content licensing contributions, from $2.14 billion.
Theatrical revenue decreased 35.5%, primarily due to the strength of releases in last year's second quarter, including "Fate of the Furious," and the timing of this quarter's releases, including "Jurassic World: Fallen Kingdom." Home entertainment revenue decreased 32.8%, reflecting the success of several releases in the prior-year period, including "Fifty Shades Darker," "Sing," "Split" and "Get Out," partially offset by "Fifty Shades Freed" in this year's second quarter. Content licensing revenue decreased 5.3%, driven by the timing of when content was made available under licensing agreements.
Second-quarter adjusted EBITDA for filmed entertainment fell 52.1% to $138 million from $287 million, stemming from lower revenue, partially offset by lower programming and production costs.